CORRECTION: The original version of this story incorrectly reported that the Houston Independent School District had cut ties with the firm Priority Technology Services. The firm was disqualified from bidding on one transaction last year. The district's inspector general has recommended the district not do business in the future with Priority, but the firm remains eligible to do business with HISD. Texas Watchdog regrets the error. A corrected and revised version of the story appears below.

The inspector general for Houston's public school system has recommended the district cut ties with a local computer equipment firm because of its previous connection to a former school official involved the district’s e-Rate tech vendor scandal, records show.

The Houston Independent School District bought $30,000 in equipment from Priority Technology Services without knowing it was once partly owned by William “Bill” Edwards, who resigned in 2005 as HISD’s assistant superintendent for technology.

The district started doing business with Priority in 2008. When HISD found out about Edwards’ links to the firm last year, the school district disqualified it from one potential job it was bidding on, even though Edwards was no longer connected to the company. However, the company remains eligible to do business with the school district in the future, an HISD spokesman said.

The school system's inspector general, Robert E. Moore, wrote that HISD "should consider denying business opportunities" to Priority and one other firm "as a precautionary safeguard," even though Edwards is no longer involved in the firm and HISD’s purchases from Priority weren’t done through e-Rate, the school district said.

Edwards was listed on state paperwork as recently as 2009 as a director of the firm. HISD officials determined he had once owned 33% of the company, but sold his ownership stake in 2007.

He was one of three former HISD employees who were accused of accepting gifts, some of them lavish, from vendors who sought to outfit the Houston schools with computers and networking equipment through a federal program called e-Rate. Edwards could not be reached for comment for this story.

The cozy relationship between e-Rate vendors and the three HISD officials prompted the federal government to freeze $105 million of the district’s e-Rate funding for five years. It also cost the district an additional $1 million in direct costs. A similar controversy in Dallas, involving some of the same vendors, sent one Dallas ISD administrator and a vendor to federal prison.

Since then, HISD has launched an aggressive effort to steer clear of e-Rate problems, including refusing to do business with some of the companies and people who were involved.

Richard Patton, who serves as HISD’s internal watchdog for the e-Rate program, said in a written statement to Texas Watchdog that he didn’t think Priority tried to hide Edwards’ connection to the firm. But he also said Edwards’ name did not appear on a list of key Priority employees that HISD reviewed, prompting him to call the company’s president to ask about Edwards.

The president, Matthew Colletti, “stated that Edwards was no longer associated with Priority and I obtained evidence to support that,” Patton said.

Colletti showed Patton a stock sale agreement and an endorsed check showing Colletti had bought out Edwards’ ownership portion in November 2007, the same year the company was formed and the year before it began doing business with HISD. The school district “was not aware of such until well after the bids were evaluated,” Patton said.

Records from the state Secretary of State’s office list Edwards and Colletti as an “officer, director or member” of the firm as recently as March 2009. However, Edwards’ name does not appear on the same form dated February 2010, which identifies Colletti as the president.

According to Priority’s website, Colletti himself is a former employee of two other tech vendors accused of lavishing gifts on HISD employees in the e-Rate debacle, Analytical Computer Services and Acclaim Professional Services. Colletti did not return a phone message or an e-mail seeking comment. Calls to two other Priority employees identified on the company’s Web site were also not returned.

HISD figured out Priority’s connection with Edwards sometime last year, when the school district’s inspector general saw it mentioned on Priority’s Web site, Patton said, and mentioned it in an internal quarterly report last September.

With offices on the Katy Freeway, Priority “provides quality technology to K-12 school districts,” according to its site. As of last week, the site pointed out that Colletti had done business with both the Houston and Dallas school districts.

HISD bought $31,000 in “small computerized instructional devices” from Priority, records say, such as Hitachi projectors and “interwrite” pads -- electronic tablets that allow instructors to interact with a projected computer screen the way a teacher of 20 years ago might have displayed algebraic formulas with an overhead projector. The devices were bought through a Texas Association of School Boards purchasing cooperative.

Internal reports indicate that HISD maintains a “watch list” regarding e-Rate business, and that Priority is, or has been, on that list.

“I am using all available resources to identify potential pitfalls for the District,” Patton said of the watch list. “Companies land on the watch list based on the information I uncover through research.”

An annual report HISD is required to file regarding e-Rate also mentions the difficulty the district has maintaining current vendor employee lists, a problem that would make it harder for the school system to steer clear of hiring firms that employ those involved in the e-Rate brouhaha.

Despite that challenge, Edwards isn’t the only e-Rate player HISD has sniffed out recently.

The district’s inspector general has also recommended that the district decline to do business in the future with a local construction firm, General WorXs, because of its connection to Scott Blankenship, a former manager at Analytical Computer Services.

Blankenship works for General WorXs as a project manager, and the company is partly-owned by his wife, according to HISD documents.

Analytical earned more than $68.4 million through HISD’s E-Rate program in 2000-06. The company is also at the center of another federal lawsuit relating to E-Rate services at both HISD and Dallas ISD.

General WorXs has unsuccessfully bid on work through an HISD program that hires contractors to perform repairs and small construction projects, referred to as “job order contracts.” But the company’s bid didn’t win.

Blankenship could not be reached for comment. A message left at the office phone number in an online phone directory was not returned. Additional calls to potential numbers for Blankenship, gleaned through a commercial database service and public records obtained from HISD, went to disconnected phone numbers.

The recent e-Rate report says outside auditors Deloitte and Touche found that procedures in HISD’s E-Rate program “provide that the competitive bidding process for E-Rate goods and services is ‘fair and open’ as required by and consistent with all E-Rate Program Rules.” There were also no e-Rate-related complaints this year to HISD’s whistleblower hotline or the district inspector general, the report says.